Climate Week Sadly Misses The Boat On Natural Gas

Climate Week Somehow Missed Natural Gas

As a cleaner, more flexible, and more reliable fuel that supports intermittent wind and solar power, Natural gas is a centerpiece of climate and energy strategies put forth, including under President Obama Incredibly, Climate Week in New York City did not have a single “Energy Transition” event that focused on gas. We know that this is a terrible missed opportunity because the surge in U.S. gas use has the country leading the world in CO2 reduction.

Just ask Dr. Fatih Birol, Director of the International Energy Agency, the energy advisor of our 36 OECD nations: “In the last 10 years, the emissions reductions in the United States has been the largest in the history of energy.” During this time, U.S. gas demand has soared over 30%, and gas has extended its share of U.S. electricity from 21% to 38%. Unfortunately, Climate Week ignored the reality that IEA has gas demand actually rising under its Sustainable Development Scenario that is fully aligned with the global Paris Agreement for climate signed in December 2015.

Gas usage is being encouraged all over the globe: when combusted, gas emits 50% less CO2 than coal and 30% less than oil. In fact, those even pushing for a politically unpopular carbon tax must know that gas displacing coal in power and gas displacing oil in transport explains why gas usage even increases under anti-carbon policies.

Importance of Gas

Indeed, both U.S. and global gas demand since 2009 are up 40% to 750 Mtoe and 3,500 Mtoe respectively. By comparison, oil demand is up 16%, with coal up 9%. This “dash to gas” is no wonder: gas gets utilized in a variety of sectors. For example, coal (power), oil (transport, petrochemicals) and renewables (power) are mostly pure play energy sources. In contrast, natural gas is essential as a fuel in the residential, commercial, electricity, and industrial sectors. In fact, gas is a perfect complement for renewable power projects, where gas-fired turbines fill-in for when the "wind isn't blowing" and "the sun isn't shining."

Over the past 20 years, global gas reserves have ballooned over 50% to 7,000 Trillion Cubic Feet, as governments seek to increasingly rely on natural gas. Both the world’s leading forecasters believe in more gas. IEA has global gas demand set to grow at almost 2% per annum, increasing at least 50% by 2040; the U.S. Department of Energy’s EIA has our domestic gas demand rising 10-15% by 2040. Importantly, EIA has U.S. gas power generation booming nearly 35% by 2040, even as renewables make significant strides. And remember that, as a vastly underestimated fact, historically low gas prices here in the U.S. and for LNG globally are locking in more gas infrastructure and use.

So staying pragmatic, even these lofty expectations for gas might ultimately be proven too low if wind and solar do not deliver as promised. From less “sweet spots” available to battery issues to Rare Earth limitations to a flattening of cost reductions to the removal of tax incentives, there are a variety of factors that could slow wind and solar development and make natural gas even more essential than expected. Consider the following quote from Bloomberg, undoubtedly a pro-wind and –solar outfit:

• “The world will probably need more power from natural gas in the coming decades than previously thought because low electricity prices during the day could limit the rise in solar plants. The cleanest fossil fuel’s share of the primary energy mix in 2050 will be as much as 29%...A similar report a year ago had pegged the share at 25%. Solar’s contribution was cut to 12%, from 16% a year earlier,” Bloomberg, September 10, 2019

Importance of U.S. Gas Exports

EIA models that U.S. gas production will rise about twice as fast as domestic demand. This will give us a critical opportunity to export this modern fuel to a mostly poor, energy-deprived world trying to align with the Paris Agreement for climate: “COP21 Means More Natural Gas and the U.S. Must Help.”

The Houston Chronicle maps our five operating LNG export facilities that are just the start, with "a new wave of LNG facilities is expected to come online in the U.S. over the next decade, worth $118 billion." In fact, IEA projects that the U.S. will become the largest LNG exporter by 2024. We sit at the heart of a booming global LNG business that will give billions of people better access to the world’s rapidly emerging go-to fuel to cut emissions, grow economies, and lift human development. Now at ~45 Bcf/d, some 13-15% of total gas usage, the LNG trade is poised to more than double by 2040.

Ultimately, spurious energy policies that ignore this essential role of natural gas in establishing a better world are far worse than ever imagined: "Without Fracking For Natural Gas, The U.S. Loses And Putin Wins." This all explains why exporting U.S. LNG has long enjoyed bi-partisan support.

Gas Alleviating Abject Global Poverty

There was no official count but global poverty and energy deprivation unsurprisingly did not get much mention during Climate Week. We have known for years that the poor and their immense need for more energy have become the world’s forgotten calamity. The horrific stats are overwhelming, but let me give you just a few to grasp what humanity faces.

Nearly half of the world lives on less than $5.50 a day; some 17,300 children under 15 die every day from preventable causes, most of which are enabled by a lack of energy; 3 billion humans still unbelievably are forced to rely on biomass for energy – household air pollution killing 4 million people a year.

Thus, the position of “only wind, only solar” is not just utterly unrealistic but also utterly unfair: gas supplies a growing 30% of the energy in the world’s richest economies with the healthiest people. Even those fully developed countries that are spending literally hundreds of billions of dollars to incorporate more wind and solar are seeking more gas: "Germany takes steps to spur more investment in LNG terminals."

This explains why China, India, and the other still developing countries, where gas supplies less than 10% of all energy, have national policies for more natural gas use as a destination fuel: "China adopts natural gas to fight deadly smog."

And from an energy complex standpoint, wind and solar only compete in the power sector, which accounts for just 20-25% of our total energy demand. In other words, wind and solar do not compete in the majority of ways in which we consume energy.  In turn, despite major investment, wind and solar still supply only supply 3% of the world's total energy

While both are indeed growing in importance, our reality is that we must focus on practical solutions because not being so is, itself, bad for the environment: "Stalled gas pipelines could push power grids back to oil and coal." Sadly, Climate Week was another wasted opportunity to discuss the indispensable role of natural gas in reaching our goals.